Families need to talk about long term care
A THIRD of Britons aged over 55 who own their homes expect that they will have to sell their property to meet the costs of long term care for themselves or their partner. That figure comes from new research, commissioned by the wealth management team at solicitors Dickinson Dees. The YouGov survey also finds that nearly three-quarters of those aged 35-54 have never discussed the costs of long term care with their parents – and almost one third of those under 55 feel that inheriting their parents’ home is important to their retirement plans. That sounds like a recipe for problems sooner rather than later, what the report calls a “ticking time bomb for Britain’s middle aged”. With one in four women and one in six men needing long term care, according to the 2006 Wanless report, the probabilities of being affected are too high to ignore this explosive financial problem.
The issue is even more worrying when considered in terms of its cascading effects across the generations: if a parent does have to sell the family home to cover their care, not only will their children potentially find themselves facing difficulties in managing their own retirement without that inheritance, but their grandchildren may find themselves faced with infirm parents who lack the resources to pay for their care.
While the statistics show that few of us discuss this vital issue, communication and early planning are essential to reducing the risk of losing one’s home to pay for care. Deborah Jude, a partner at Dickinson Dees, says: “Families need to break the taboo of silence on infirmity and mortality that currently leads to two generations being robbed of a pleasant retirement, replacing it with the misery of a battle to meet escalating care costs.”
The government is aware of the problems with long term care, and the independent Dilnott Commission is due to report by July of this year on the best options for public policy. But in the current climate of austerity and overstretched tax revenues, it would be unwise to wait for government recommendations in the hope that they will be lavish.
So what can you do to protect yourself? The Department for Health produces the Charging for Residential Accommodation Guide (CRAG), updated annually. This provides guidance on how your capital is assessed if you are seeking assistance in paying for care. Married couples heading for retirement should be careful of joint savings accounts and joint tenancies, as separate holdings are less exposed to being taken to help cover the costs of a partner’s care. It is also wise to think about setting up a Lasting Power of Attorney (LPA), that specifies who can look after your affairs if you become incapacitated. After the fact, this is much harder and the Court of Protection will have to become involved.
But before contacting lawyers and financial advisers, the first step is to discuss this challenge with your family. Jude adds: “No matter how difficult the issue, our research shows that many retirement-aged people would welcome their children broaching the subject of what happens when they become infirm – although clearly diplomacy is needed.”